Comcast and 21st Century Fox are in talks about a sale of Fox's worldwide entertainment and distribution assets to Comcast for Comcast stock, according to people familiar with the situation.
The talks are ongoing, but no deal is near.
Comcast, which has a very limited international presence, is focused on Fox's international assets, which represent as much as 70 percent of the financial contribution of the businesses for sale, but also wants to purchase the company's movie studio, its cable networks and its regional sports networks, according to people close to the talks. Comcast is not interested in Fox News, Fox Business, or its national sports channel FS1, sources said.
Comcast is also attracted by the prospect of gaining control of Hulu. Comcast is currently prevented from exercising control over its stake in Hulu due to the consent decree it signed with the government when it bought NBC Universal, but that consent decree expires in August of 2018.
Sources told CNBC that federal officials reached out to 18 state AGs and sent a draft complaint to at least seven of them, but so far no states have committed join the case. The DOJ is still likely to bring one, the sources said.
The $85 billion merger was announced last year but has dragged on as the government reviews it for anti-trust matters.
CNBC earlier reported last week that the government could sue to block a transaction unless AT&T agrees to sell Turner Broadcasting, owner of the CNN cable news channel, or its DirectTV division. But the Justice Department has pushed back on the idea it is trying to force a sale of either of those assets, and AT&T's CEO has said he has no intention of selling CNN.
Last year, the Justice Department under the Obama administration teamed up with 11 states to challenge Anthem's $54 billion acquisition of Cigna, and with eight states to block Aetna's $37 billion of Humana. Both deals were canceled earlier this year.
21st Century Fox has been holding talks to sell most of the company to Walt Disney Co., leaving behind a media company tightly focused on news and sports, according to people familiar with the situation.
The talks have taken place over the last few weeks and there is no certainty they will lead to a deal. The two sides are not currently talking at this very moment, but given the on again, off again nature of the talks, they could be revisited.
For Fox, the willingness to engage in sale talks with Disney stems from a growing belief among its senior management that scale in media is of immediate importance and there is not a path to gain that scale in entertainment through acquisition. The company is said to believe that a more tightly focused group of properties around news and sports could compete more effectively in the current marketplace.
The media landscape has changed considerably in recent years with giants such as Facebook, Google (Alphabet), Amazon and Netflix changing the way people consume media and dominating the digital distribution of digital video content. Being able to compete in that changing landscape, many people believe, requires scale that a Disney has, but 21st Century Fox does not.
For Disney, the opportunity to take control of another movie studio and significant TV production assets as it readies a direct-to-consumer entertainment streaming offering is attractive as is Fox's significant exposure to international markets, such as the U.K., Germany and Italy — both through its networks and 39 percent ownership of Sky. Disney recently announced it will pull all of its movies from the Netflix platform and will establish two direct-to-consumer offerings: one for sports and one including its key franchises such as "Star Wars" and Marvel.
Disney would not purchase all of Fox, according to people with knowledge of the talks.
The company could not own two broadcast networks and would therefore not buy the Fox broadcast network. It would not buy Fox's sports programming assets in the belief that combining them with ESPN could be seen as anti-competitive from an antitrust standpoint and it would not buy the Fox News or Business channel. Disney would also not purchase Fox's local broadcasting affiliates, according to people familiar with the negotiations.
In addition to the movie studio, TV production and international assets such as Star and Sky, Disney would also add entertainment networks such as FX and National Geographic.
The contemplated structure of the deal or the price that has been discussed could not be learned. Given it would involve the sale of many, but not all of Fox's properties, it's unclear how Fox would mitigate potential tax consequences of a deal.
Officials at Disney and Fox declined to comment. Fox shares ended Monday higher by 9.9 percent. Disney added 2 percent on the day.
SoftBank is willing to re-engage Charter Communications on a deal if the cable giant's management indicates interest, sources told CNBC.
During the summer the Japanese conglomerate had worked on a move to acquire Charter for $540 a share in cash and stock, the sources said. SoftBank would have contributed Sprint shares to the new company at roughly $10 a share, they said.
Charter shares traded around $402 as recently as September but have since fallen. They opened for trading at $338 on Monday.
SoftBank's founder Masayoshi Son had been trying to put together a deal to combine Sprint and T-Mobile but talks were drawn out as the two sides battle over governance and control issues. Those talks officially ended Saturday as both companies said a deal could not be reached.
But Son has also mulled a deal with Charter, which is 27 percent owned by Liberty Media and its chairman, John Malone. Liberty and the Newhouse family together control almost 50 percent of Charter's equity. Liberty was interested in the SoftBank offer while Charter's management was not, the sources told CNBC.
Liberty's broadband operation would have rolled into the new company, the sources said.